Merit Medical Systems, Inc. (Nasdaq:MMSI), a leading manufacturer
and marketer of proprietary disposable devices used primarily in
cardiology, radiology and endoscopy, today announced that it
estimates sales for the full year 2014 in a range of $488.0 to
$498.0 million. Merit also estimates earnings on a non-GAAP basis
in a range of $0.74 to $0.78 per share and earnings on a GAAP basis
in a range of $0.53 to $0.57 per share.
Management expects revenue growth will be driven primarily by
the introduction of new products, expansion from distributors to
direct sales, and increased sales of embolic products as a result
of recent regulatory approvals in Asia.
Management believes new product introductions such as the
Prelude® Ease Hydrophilic Radial Sheath, which is complemented by
the Rad Board®, Rad Rest® and the SAFEGUARD® Radial Compression
Device, will help drive Merit's Think Radial™ program. Management
also believes other new products such as the ConcierGE® Guiding
Catheter, the SureCross® Catheter, the ASAP® LP Aspiration Catheter
and Worley™ Coronary Sinus Guide will generate sales force focus
and customer interest. The introduction in China and Japan of
Merit's embolic products, Embosphere® and Hepasphere®, which were
approved in late 2013, are exceeding management's initial
expectations. Costs related to product launches, such as sales
training, samples, and scale-up costs are expected to primarily
affect the early quarters of 2014.
Although Merit expects to increase its GAAP and non-GAAP
earnings numbers in 2014 as compared to 2013, management
anticipates that several factors may impact Merit's 2014 financial
performance.
Management's goal is to increase gross margin by approximately
140 basis points in 2014. Merit anticipates that during a
portion of the year, SG&A expense will be negatively affected
by the transition from Merit's facility in Angleton, Texas, to its
new facility in Pearland, Texas. The move is scheduled to
commence in March and be completed in September. During the
first months of this transition, Merit will carry a large portion
of this in SG&A expense and will transition to cost of sales as
the project is completed. Management believes this transition
plan will enable Merit to maintain delivery schedules to customers
while providing a state-of-the-art facility for future growth and
development and mitigating the challenges of an aging facility and
weather-related risks.
Merit reinstated its 401(k) pension match for its employees
effective January 1, 2014. Management believes this
reinstatement will increase employee morale and enable Merit to be
competitive in recruitment and retention. This expense is
estimated to be approximately $2.4 million in 2014.
Although Merit had no increases in healthcare plan expenses in
the 2013 policy year, Merit received a premium increase of almost
$1.6 million for calendar year 2014. Management believes this
increase was a function of claim experience and concerns by
insurance companies of additional costs of benefits required by the
Patient Protection and Affordable Care Act (the "Affordable Care
Act"), as well as a new employer tax of approximately
$260,000. The aforementioned expense is in addition to the
medical device excise tax imposed on Merit by the Affordable Care
Act in 2013. Merit initiated a self-insurance plan effective
January 1, 2014. Management believes this initiative will
assist in controlling costs and provide more flexibility in the
future.
Merit is engaged in litigation as a plaintiff against Bard
Access Systems, Inc. The litigation is currently in the
discovery stage and is currently expected to go to trial during the
third quarter of 2014. The dispute pertains to certain
contractual rights asserted by Merit regarding the SecureLoc®
Safety Needle.
Merit estimates sales for the first quarter of 2014 will grow by
approximately 10% over the first quarter of 2013, but will be
sequentially lower than the fourth quarter of 2013.
Management anticipates that capital outlays during 2014 will
slow substantially, allowing reduction in Merit's debt level, and
opportunities afforded by the facilities and infrastructure built
over the last few years are expected to create opportunities for
increased productivity. A number of Merit's cost containment
and cost reduction programs are being led by Ron Frost, who was
recently appointed as Chief Operating Officer. Frost, an
engineer by training, has 22 years of experience with
Merit. Frost assumed his responsibility from Arlin Nelson, who
recently retired after 25 years of service to Merit.
CONFERENCE CALL TODAY
Merit invites all interested parties to participate in its
conference call today, March 3rd, 2014, at 5:00 p.m. Eastern (4:00
p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). The
domestic phone number is (877) 941-0844, and the international
number is (480) 629-9835. A live webcast, as well as a
rebroadcast of the conference call, can be accessed at
www.merit.com.
ABOUT MERIT
Founded in 1987, Merit Medical Systems, Inc. is engaged in the
development, manufacture and distribution of proprietary disposable
medical devices used in interventional and diagnostic procedures,
particularly in cardiology, radiology and endoscopy. Merit
serves client hospitals worldwide with a domestic and international
sales force totaling approximately 200 individuals. Merit
employs approximately 3,000 people worldwide with facilities in
South Jordan, Utah; Angleton, Texas; Richmond, Virginia; Malvern,
Pennsylvania; Maastricht and Venlo, The Netherlands; Paris, France;
Galway, Ireland; Beijing, China; and Rockland, Massachusetts.
Statements contained in this release which are not purely
historical, including, without limitation, statements regarding
Merit's forecasted revenues, net income, financial results or
anticipated acquisitions, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
are subject to risks and uncertainties such as those described in
Merit's Annual Report on Form 10-K for the year ended December 31,
2012. Such risks and uncertainties include risks relating to
Merit's potential inability to successfully manage growth through
acquisitions, including the inability to commercialize technology
acquired through completed, proposed or future
transactions; product recalls and product liability claims;
the effect of pending or future litigation or other disputes
regarding Merit's business, operations or intellectual property;
expenditures relating to research, development, testing and
regulatory approval or clearance of Merit's products and risks that
such products may not be developed successfully or approved for
commercial use; greater governmental scrutiny and regulation of the
medical device industry; reforms to the 510(k) process administered
by the U.S. Food and Drug Administration; compliance with
governmental regulations and administrative procedures; potential
restrictions on Merit's liquidity or its ability to operate its
business by its current debt agreements; possible infringement of
Merit's technology or the assertion that Merit's technology
infringes the rights of other parties; the potential of fines,
penalties, or other adverse consequences if Merit's employees or
agents violate the U.S. Foreign Corrupt Practices Act or other laws
and regulations; laws targeting fraud and abuse in the healthcare
industry; potential for significant adverse changes in, or failure
to comply with, governing regulations; the effect of changes in tax
laws and regulations in the United States or other countries;
increases in the prices of commodity components; negative changes
in economic and industry conditions in the United States and other
countries; termination or interruption of relationships with
Merit's suppliers, or failure of such suppliers to perform;
fluctuations in Euro and GBP exchange rates; Merit's need to
generate sufficient cash flow to fund its debt obligations, capital
expenditures, and ongoing operations; concentration of Merit's
revenues among a few products and procedures; development of new
products and technology that could render Merit's existing products
obsolete; market acceptance of new products; volatility in the
market price of Merit's common stock; modification or limitation of
governmental or private insurance reimbursement policies; changes
in health care markets related to health care reform initiatives;
failure to comply with applicable environmental laws; changes in
key personnel; work stoppage or transportation risks; uncertainties
associated with potential healthcare policy changes which may have
a material adverse effect on Merit; introduction of products in a
timely fashion; price and product competition; availability of
labor and materials; cost increases; fluctuations in and
obsolescence of inventory; and other factors referred to in Merit's
Annual Report on Form 10-K for the year ended December 31, 2012 and
other materials filed with the Securities and Exchange Commission.
All subsequent forward-looking statements attributable to Merit or
persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. Actual results will
differ, and may differ materially, from anticipated results.
Financial estimates are subject to change and are not intended to
be relied upon as predictions of future operating results, and
Merit assumes no obligation to update or disclose revisions to
those estimates.
CONTACT: Anne-Marie Wright, Vice President,
Corporate Communications
(801) 208-4167
e-mail: awright@merit.com
Fax: (801) 253-1688
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